SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
TREDEGAR INDUSTRIES, INC
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
Tredegar Industries, Inc.
1100 Boulders Parkway
Richmond, Virginia 23225
[LOGO]
Annual Meeting of Shareholders
March 25, 1998
To the Shareholders:
We invite you to attend the Annual Meeting of Shareholders to be
held in the Grand Ballroom of The Jefferson Hotel, Franklin & Adams
Streets, Richmond, Virginia, on Wednesday, May 20, 1998, at 9:30 a.m.,
Eastern Daylight Time. A formal notice of the meeting, a proxy
statement and a proxy form are enclosed. You are being asked to elect
directors, approve the designation of auditors for the coming year and
approve a directors' stock plan.
Please read the notice and proxy statement, complete the proxy form
and mail it promptly.
Sincerely yours,
/s/ JOHN D. GOTTWALD
-------------------------
JOHN D. GOTTWALD
President and Chief Executive Officer
Tredegar Industries, Inc.
1100 Boulders Parkway
Richmond, Virginia 23225
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of the holders of shares of Tredegar Industries, Inc.'s
("Tredegar") Common Stock ("Common Stock") will be held in the Grand Ballroom
of The Jefferson Hotel, Franklin & Adams Streets, in Richmond, Virginia, on
Wednesday, May 20, 1998, at 9:30 a.m., Eastern Daylight Time, for the following
purposes:
1. To elect four directors to serve until the 2001 annual meeting and until
their successors are elected;
2. To approve the designation of Coopers & Lybrand L.L.P. as auditors for
the fiscal year ending December 31, 1998;
3. To approve the Directors' Stock Plan; and
4. To conduct any other business properly raised at the meeting.
Anyone who is shown on Tredegar's stock records as holding shares of
Common Stock at the close of business on March 18, 1998, may vote at the
meeting.
Please complete, sign, date and return the enclosed proxy form promptly,
regardless of whether you plan to attend the meeting. You may still vote in
person at the meeting even if you return the proxy. A self-addressed, stamped
envelope is enclosed.
By Order of the Board of Directors
Nancy M. Taylor, Secretary
March 25, 1998
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
TREDEGAR INDUSTRIES, INC.
To be held May 20, 1998
Approximate date of mailing -- March 25, 1998
Tredegar's Board of Directors (the "Board") is soliciting your proxy for
the Annual Meeting of Shareholders to be held on Wednesday, May 20, 1998.
Anyone giving a proxy may revoke it any time before it is voted. A proxy can be
revoked by voting in person at the meeting, delivering another proxy, or
notifying Tredegar's Secretary in writing that you want to revoke your proxy.
All signed proxies that have not been revoked will be voted at the Annual
Meeting. If your proxy contains any specific instructions, they will be
followed.
On March 18, 1998, the date for determining shareholders entitled to vote
at the meeting, there were 11,931,866 outstanding shares of Common Stock. Each
share of Common Stock is entitled to one vote.
Tredegar will pay the cost of soliciting proxies and may use employees to
solicit proxies by mail, in person or by telephone. Corporate Investor
Communications, Inc. ("CIC") has been engaged to solicit proxies from brokers,
nominees, fiduciaries and other custodians. Tredegar will pay CIC $4,500 for
its services and will reimburse CIC for its out-of-pocket expenses.
Tredegar's address is 1100 Boulders Parkway, Richmond, Virginia 23225.
ELECTION OF DIRECTORS
The Board is divided into three classes of directors as nearly equal in
number as possible. Each class of directors serves for three years. The term
for each class is staggered so that one class is elected at each annual
meeting.
The terms of John D. Gottwald, Andre B. Lacy and Emmett J. Rice will
expire at the 1998 Annual Meeting. John D. Gottwald, Andre B. Lacy, Emmett J.
Rice and Thomas G. Slater, Jr., have been nominated by the Board for election
at the 1998 Annual Meeting for the term expiring at the 2001 Annual Meeting of
Shareholders.
To be elected, a nominee must receive "for" votes from shareholders owning
at least a plurality of the shares of Common Stock voted in the election of
directors. Unless otherwise specified in your proxy, signing and returning your
proxy will constitute a vote "for" all of the nominees. Any votes withheld and
any shares held in street name that are not voted will not be counted in
determining the number of votes cast. In the event that any nominee for
director is unavailable for election, the Board
1
may either reduce the number of directors or designate a substitute nominee. If
the Board selects a substitute nominee, the shares represented by proxy will be
voted for the substitute nominee, unless otherwise specified.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" ALL OF THE NOMINEES.
Below is some information on the four nominees and the directors who will
continue on the Board after the meeting:
Austin Brockenbrough, III - age 61; director since 1993; Managing Director
and President of Lowe, Brockenbrough & Tattersall, Inc. (private investment
counseling firm) since 1970. Other directorship: Trustee of The Williamsburg
Investment Trust. Term expires 2000.
Phyllis Cothran - age 51; director since 1993; retired, having served
previously as President and Chief Operating Officer of Trigon Blue Cross Blue
Shield, a health insurance (and related services) company, from November, 1990
until March 31, 1997. Other directorship: Ethyl Corporation ("Ethyl"), a
petroleum additives company. Term expires 1999.
Richard W. Goodrum - age 70; director since 1989; retired, having served
previously as Executive Vice President and Chief Operating Officer of Tredegar
from July 10, 1989 until March 31, 1996. Term expires 1999.
Floyd D. Gottwald, Jr. - age 75; director since 1989; Chairman of the
Board and Chief Executive Officer of Albemarle Corporation, a chemicals company
("Albemarle"), since March 1, 1994; having served previously as Vice Chairman
of Ethyl from March 1, 1994 until February 29, 1996, and as Chairman of the
Board of Ethyl from 1968 until March 1, 1994. Other directorship: Albemarle.
Term expires 1999.
John D. Gottwald - age 43; director since 1989; President and Chief
Executive Officer of Tredegar since July 10, 1989. Other directorship:
Albemarle. Term expires 1998.
William M. Gottwald - age 50; Vice President, Corporate Strategy, of
Albemarle since August, 1996; having served previously as Vice President of
Ethyl from September, 1994 until August, 1996, and as President of Whitby,
Inc., a pharmaceuticals company, from September, 1989 until September, 1994.
Term expires 2000.
Andre B. Lacy - age 58; director since 1989; Chairman of the Board, Chief
Executive Officer and President of LDI Management, Inc. (distribution and
manufacturing holding company), and Managing General Partner of LDI, Ltd.
(industrial and investment limited partnership) since 1986. Other
directorships: Albemarle, FinishMaster, Inc., Herff Jones, Inc., IPALCO
Enterprises, Inc., The National Bank of Indianapolis, Patterson Dental Company.
Term expires 1998.
Richard L. Morrill - age 58; President, University of Richmond since 1988.
Other directorship: The Williamsburg Investment Trust. Term expires 2000.
2
Emmett J. Rice - age 78; director since 1989; retired, former member of
the Board of Governors of the Federal Reserve System. Other directorships:
Albemarle and Jardine-Fleming China Region Fund, Inc. Term expires 1998.
Norman A. Scher - age 60; director since 1989; Executive Vice President
and Chief Financial Officer of Tredegar since July 10, 1989; having served
previously as Treasurer of Tredegar from July 10, 1989 until May 22, 1997.
Other directorship: DIMON, Incorporated. Term expires 2000.
Thomas G. Slater, Jr. - age 54; Partner of Hunton & Williams, a law firm,
since 1976. Nominated for term expiring 2001.
There were four meetings of the Board held in 1997. Except for Andre B.
Lacy, all of the directors attended at least 75% of the total number of Board
meetings and Board Committee meetings (of which the director was a member) held
in 1997. Mr. Lacy missed one Board meeting and two Audit Committee meetings.
John D. Gottwald, Richard W. Goodrum and Norman A. Scher serve on
Tredegar's Executive Committee. Tredegar's By-laws allow the Executive
Committee to exercise the authority of the Board, except as limited by the
Virginia Stock Corporation Act, and except with respect to the compensation of
executive officers (which is determined by the Executive Compensation
Committee). During 1997, the Executive Committee met informally as required as
Tredegar's principal management committee.
Austin Brockenbrough, III, Richard W. Goodrum and Andre B. Lacy serve on
Tredegar's Audit Committee, which met twice during 1997. This Committee reviews
Tredegar's internal audit and financial reporting functions and the scope and
results of the audit performed by Tredegar's independent accountants. The Audit
Committee reports to the Board on those matters and recommends to the Board the
engagement of the independent accountants.
Phyllis Cothran, Richard L. Morrill and Emmett J. Rice serve on Tredegar's
Executive Compensation Committee, which met three times in 1997. This Committee
approves the salaries and bonus awards of executive officers, and grants awards
under Tredegar's stock incentive plans. The Executive Compensation Committee is
composed of individuals who, either currently or in the prior year, are not and
were not eligible to participate in any stock incentive plan of Tredegar. If
the proposed Directors' Stock Plan (see page 18) is approved by shareholders,
the Board (not the Executive Compensation Committee) will approve grants under
that plan. The members of the Executive Compensation Committee will be eligible
for awards under the Directors' Stock Plan.
John D. Gottwald, Norman A. Scher and Austin Brockenbrough, III, serve on
Tredegar's Nominating Committee, which met twice in 1997. This Committee
recommends to the Board the nominees for election as directors and may make
other recommendations regarding the term of office, classification and
compensation of directors.
Austin Brockenbrough, III, Richard L. Morrill and Norman A. Scher serve on
Tredegar's Investment Policy Committee, which met six times in 1997. This
Committee administers Tredegar's Investment Conflict of Interest Policy.
3
Tredegar's By-laws allow any shareholder who is entitled to vote in the
election of directors to nominate a director. To do so, the shareholder must
give written notice to Tredegar's Secretary at least ninety days before the
Annual Meeting of Shareholders or, when an election is to be held at a special
meeting of shareholders, by the close of business on the seventh day following
the day that the notice of the special meeting is given to shareholders. The
notice must include the following: (i) the name and address of the shareholder
and of each person nominated, (ii) a representation that the shareholder is a
record holder of Tredegar's Common Stock, that he or she is entitled to vote at
the meeting and will appear in person or by proxy at the meeting to nominate
the people named in the notice, (iii) a description of all arrangements or
understandings between the shareholder and each nominee and any other person
pursuant to which the nomination is being made, (iv) the information on each
nominee required under the applicable rules of the Securities and Exchange
Commission to be included in a proxy and (v) the consent of each of the
shareholder's nominees to serve as a director of Tredegar if elected.
John D. Gottwald and William M. Gottwald are brothers and are sons of
Floyd D. Gottwald, Jr. The Gottwalds may be deemed to be control persons of
Tredegar. In addition, Thomas G. Slater, Jr., is married to John D. Gottwald's
sister-in-law.
4
STOCK OWNERSHIP
Below is information on the beneficial ownership of Tredegar's Common
Stock by the directors, nominees and the executive officers named in the
Summary Compensation Table as of March 5, 1998. The table also shows the
beneficial ownership of all directors and executive officers of Tredegar as a
group as of March 5, 1998.
Security Ownership of Management
---------------------------------------------
Number of Shares Number of Shares Total
with Sole Voting with Shared Voting Number
and Investment and Investment of Percent of
Power Power Shares Class(a)
------------------------ -------------------- ----------------- ----------------
Outstanding Options
------------- ----------
Directors, Nominees and
Certain Executive Officers(b)
Austin Brockenbrough, III 15,000 -- 5,661 20,661 (c)
Phyllis Cothran 5,700 -- -- 5,700
Richard W. Goodrum 86,837 125,850 4,500 217,187 1.8%
Floyd D. Gottwald, Jr. 1,127,101 -- 94,606 1,221,707 (d) 10.2%
John D. Gottwald 486,503 189,600 242,422 918,525 (e) 7.6%
William M. Gottwald 27,584 -- 193,523 221,107 (f) 1.9%
Steven M. Johnson 12,664 38,500 2,250 53,414
Andre B. Lacy 334 -- 96,000 96,334 (g)
Richard L. Morrill 200 -- -- 200
Douglas R. Monk 13,196 45,245 -- 58,441
Emmett J. Rice 795 -- -- 795
Anthony J. Rinaldi 31,519 41,933 1,517 74,969 (h)
Norman A. Scher 23,640 132,000 60 155,700 1.3%
Thomas G. Slater, Jr. 500 -- -- 500
--------- ------- ------- -------------
Management
All directors and executive officers 1,896,944 638,244 636,037(k) 3,171,225 (k) 25.2%(k)
as a group (15)(i)(j)
- ----------
(a) Except where otherwise noted, each person owns less than 1% of
Tredegar's outstanding Common Stock.
(b) Some of the shares may be considered to be beneficially owned by more
than one person or group listed and are included in the table for each.
(c) Austin Brockenbrough, III, disclaims beneficial ownership of 5,661
shares of Common Stock.
(d) Floyd D. Gottwald, Jr., disclaims beneficial ownership of 94,606
shares of Common Stock.
(e) John D. Gottwald disclaims beneficial ownership of 60,614 shares of
Common Stock.
(f) William M. Gottwald disclaims beneficial ownership of 33,595 shares of
Common Stock.
(g) Andre B. Lacy disclaims beneficial ownership of 73,222 shares of
Common Stock.
5
(h) Anthony J. Rinaldi disclaims beneficial ownership of 1,466 shares of
Common Stock.
(i) The directors, nominees and executive officers have sole voting and
investment power over their shares, except for the those listed in the second
column, which are held by or jointly with spouses, by children or in
partnerships and certain trust relationships. Any shares held under Ethyl's,
Albemarle's or Tredegar's benefit plans for any director, nominee or executive
officer are included in the number of shares over which that person has sole
voting or investment power. Shares held by the trustees of those plans for
other employees are not included. See Note (d) to the table "Security Ownership
of Certain Beneficial Owners" below.
(j) Two directors share voting and investment power for 4,502 shares. This
overlap in beneficial ownership has been eliminated in calculating the number
of shares and the percentage of class owned by Management.
(k) The above table does not include some of the shares owned by the adult
children of Floyd D. Gottwald, Jr. Nor does it include the shares owned by
Floyd D. Gottwald, Jr.'s brother, Bruce C. Gottwald, and his adult children.
Bruce C. Gottwald, Floyd D. Gottwald, Jr., John D. Gottwald and William M.
Gottwald may be considered a "group" under Section 13(d) of the Securities
Exchange Act of 1934, and the shares owned or attributed to them and their
children are reported in the table "Security Ownership of Certain Beneficial
Owners" below. If all of those shares were included in the table above, the
total number of shares held by Management would be 4,974,185 (and 39.6% of
total shares outstanding).
The table below lists any person (including any "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934) known to Tredegar that
beneficially owned more than 5% of Tredegar's Common Stock on March 5, 1998.
Security Ownership of Certain Beneficial Owners
- ------------------------------------------------------------------------------------
Names and Addresses Number Percent
of Beneficial Owners of Shares Class
- -------------------------------------------- ------------------------ ----------
Bruce C. Gottwald,
Floyd D. Gottwald, Jr.,
John D. Gottwald, and
William M. Gottwald(a)
330 South Fourth Street
P.O. Box 2189
Richmond, VA 23217 4,159,797(b)(c) 34.3%
Wachovia Bank of North Carolina, N.A.,
as Trustee for the Savings Plan for
the Employees of Tredegar Industries, Inc.
301 North Main Street
Winston-Salem, NC 27150 1,319,662(c)(d) 11.1%
- ----------
(a) Bruce C. Gottwald, Floyd D. Gottwald, Jr., John D. Gottwald and
William M. Gottwald (the "Gottwalds"), together with members of their immediate
families, may be deemed to be a "group" for
6
purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, although
there is no agreement among them with respect to the acquisition, retention,
disposition or voting of Common Stock.
(b) The Gottwalds, individually or together, have sole voting and
investment power over all of the shares disclosed except for 1,222,541 shares
held by their respective wives and children, and in certain trust
relationships, some of which might be deemed to be beneficially owned by the
Gottwalds under the rules and regulations of the Securities and Exchange
Commission, but as to which the Gottwalds disclaim beneficial ownership. Shares
owned by the adult children of Bruce C. Gottwald and Floyd D. Gottwald, Jr.,
are included in the group holdings of the Gottwalds.
(c) This amount includes 72,935 shares owned of record by Wachovia Bank of
North Carolina, N.A., Winston-Salem, North Carolina ("Wachovia"), as trustee of
the Savings Plan for the Employees of Tredegar Industries, Inc. (the "Tredegar
Savings Plan") for the benefit of John D. Gottwald.
(d) Shares held under the Tredegar Savings Plan are voted by the Trustee
according to instructions obtained from employees participating in the plan. If
a participating employee does not give the Trustee voting instructions, his or
her shares are voted by the Trustee according to the Board's recommendations to
the shareholders (as long as doing so is consistent with the Trustee's
fiduciary duties). Because members of the Gottwald family are executive
officers, directors and the largest shareholders of Tredegar, they may be
considered to be control persons of Tredegar and to have the ability to control
the recommendations of the Board.
7
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Executive Compensation
This table shows information on compensation paid by Tredegar to the Chief
Executive Officer and the four other highest paid executive officers for their
services in all their roles to Tredegar for the fiscal years ended December 31,
1997, 1996 and 1995, respectively.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Awards
-----------------
Annual Compensation
---------------------------- Securities All Other
Name and Salary Bonus Underlying Compensation
Principal Position Year ($) ($) Options/SARs (#) ($)
- ------------------------------------ ------ --------- ---------------- ----------------- ---------------
John D. Gottwald 1997 350,000 140,000 22,000 18,230(1)
President and Chief 1996 347,167 140,000 18,000 17,824(1)
Executive Officer 1995 333,000 125,000 22,500 16,882(1)
Norman A. Scher 1997 315,000 130,000 16,000 16,335(2)
Executive Vice 1996 313,000 130,000 12,000 16,022(2)
President and Chief 1995 303,000 115,000 15,000 15,333(2)
Financial Officer
Steven M. Johnson 1997 239,583 100,000 -0- 12,185(4)
formerly Vice President- 1996 204,667 75,000 6,000 10,366(4)
Corporate Development(3) 1995 178,000 50,000 7,500 8,968(4)
Douglas R. Monk 1997 171,086 80,000(5) 12,000 8,763(6)
Vice President 1996 165,967 150,000(5) 6,000 8,416(6)
and President of 1995 156,667 50,000 7,500 7,893(6)
Aluminum Extrusions
Anthony J. Rinaldi 1997 181,750 94,191(7) 12,000 9,268(8)
Vice President and 1996 172,017 113,056(7) 6,000 8,726(8)
President of Films Division 1995 165,500 89,399(7) 7,500 8,339(8)
- ----------
(1) Matching contributions under the Savings Plan for the Employees of
Tredegar Industries, Inc. (the "Savings Plan") ($8,000 for 1997, $7,500 for
1996 and 1995) and credit under the Savings Plan Benefit Restoration Plan (the
"SPBR Plan") ($10,230 for 1997, $10,324 for 1996 and $9,382 for 1995).
(2) Matching contributions under the Savings Plan ($8,000 for 1997 and
$7,500 for 1996 and 1995) and credit under the SPBR Plan ($8,335 for 1997,
$8,522 for 1996 and $7,833 for 1995).
(3) Mr. Johnson resigned as a Vice President of Tredegar effective as of
January 1, 1998. He currently serves as President of Tredegar Investments,
Inc., a subsidiary of Tredegar.
(4) Matching contributions under the Savings Plan ($8,000 for 1997, $7,500
for 1996 and $6,650 for 1995) and credit under the SPBR Plan ($4,185 for 1997,
$2,866 for 1996 and $2,318 for 1995).
8
(5) Mr. Monk's bonus for 1996 was determined under a formula-based
incentive plan adopted for Tredegar's Aluminum Extrusion division. His 1997
bonus was awarded under a formula-based incentive plan and included a
discretionary award, which is allowed under the plan.
(6) Matching contributions under the Savings Plan ($7,857 for 1997, $7,500
for 1996 and $5,813 for 1995) and credit under the SPBR Plan ($906 for 1997,
$916 for 1996 and $2,081 for 1995).
(7) Bonus award is determined under the Tredegar Film Products division's
incentive compensation plan. Although the full amount of the award is reported
in the table, only a portion of the award was paid in cash to Mr. Rinaldi for
the year reported. For 1997, 1996 and 1995, Mr. Rinaldi received cash payments
of $80,416, $73,539 and $53,810, respectively, and the remaining portion was
deferred in accordance with the terms of the plan. Under the Film Products'
plan, an incentive award account is established for each plan participant. At
the end of each plan year, an individual award is allocated to a participant's
account. The individual award, which may be positive or negative, is determined
based on the change in the division's economic profit added. Following the
year-end award allocation, one-third of the balance in each participant's
account is paid out in cash, unless certain performance criteria have not been
met. Participants have no obligation to restore negative balances in their
accounts that may arise from a deduction for a negative award, except to the
extent of future positive incentive awards. A participant is entitled to the
cash value of his or her account upon retirement or death, with forfeiture
occurring upon the termination of employment in all other circumstances. After
giving effect to the cash incentive payment to Mr. Rinaldi made in January 1998
for the award earned in 1997, the cash value of Mr. Rinaldi's incentive award
account was $161,073. No interest is earned or paid on deferred amounts held in
participants' accounts.
(8) Matching contributions under the Savings Plan ($8,000 for 1997, $7,500
for 1996 and $6,186 for 1995) and credit under the SPBR Plan ($1,268 in 1997,
$1,226 for 1996 and $2,153 for 1995).
9
Stock Options and SARs
This table describes the stock options granted to each of the executive
officers named in the Summary Compensation Table during the fiscal year ended
December 31, 1997. There were no SARs granted during 1997.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants Grant Date Value(1)
- ------------------------------------------------------------------------------------- --------------------
Percent of
Number of Total
Securities Options/
underlying SARs Granted Exercise or
option/SARs to Employees Base Price Expiration Grant Date
Name Granted (#) in Fiscal Year ($/Sh) Date Present Value $
- -------------------- ------------- ---------------- ------------ ------------ --------------------
John D. Gottwald 11,000 5% 49.625 5/19/2007 264,550
11,000 5 63.00 5/19/2007 222,310
Norman A. Scher 8,000 4 49.625 5/19/2007 192,400
8,000 4 63.00 5/19/2007 161,680
Steven M. Johnson -0- -0- N/A N/A N/A
-0- -0- N/A N/A N/A
Douglas R. Monk 6,000 3 49.625 5/19/2007 144,300
6,000 3 63.00 5/19/2007 121,260
Anthony J. Rinaldi 6,000 3 49.625 5/19/2007 144,300
6,000 3 63.00 5/19/2007 121,260
- ----------
(1) The grant date present value is an estimate based on the Black-Scholes
option pricing model. The actual value, if any, an executive may realize will
depend on the excess of the stock price over the exercise price on the date the
option is exercised. There is no assurance the value realized by an executive
will be at or near the value estimated by the Black-Scholes model. The
assumptions used under that model include a volatility estimate of 30%, a
risk-free rate of return of 6.77% based on the 8.3-year zero coupon U.S.
Treasury bond yield at the time of grant, a dividend yield of .64% based on the
annual dividend rate at the time of grant and an estimated option holding
period of 8.3 years. The estimated grant date present value does not reflect
any discount for vesting, forfeiture provisions or prohibitions on transfer.
10
This table describes the options exercised by the executive officers named
in the Summary Compensation Table during 1997 and the year-end value of all
unexercised stock options and SARs held by those executive officers.
AGGREGATED OPTION/SAR EXERCISES
IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Fiscal Year-End (#) Fiscal Year-End($) (1)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
- --------------------- ----------------- -------------- ----------------------- -----------------------
John D. Gottwald(2) -0- -0- 189,600/22,000(3) 10,135,514/210,375
Norman A. Scher -0- -0- 132,000/16,000(4) 7,063,525/153,000
Steven M. Johnson -0- -0- 38,500/0(5) 1,999,863/0
Douglas R. Monk 500 17,493 45,245/12,000(6) 2,369,950/114,750
Anthony J. Rinaldi 4,500 236,276 47,250/12,000(7) 2,505,481/114,750
- ----------
(1) Based on the closing price of $65.875 on December 31, 1997.
(2) The number of options and related SARs listed for Mr. Gottwald include
additional options and related SARs to purchase 10,350 shares of Common Stock
of Tredegar granted as compensation for incentive stock options to purchase
shares of Ethyl common stock held by Mr. Gottwald that were forfeited in
connection with the spin-off of Tredegar from Ethyl. These additional options
are incentive stock options.
(3) Of the total 211,600 options, 92,850 include a tandem SAR.
(4) Of the total 148,000 options, 67,500 include a tandem SAR.
(5) Of the total 38,500 options, 6,250 include a tandem SAR.
(6) Of the total 57,245 options, 12,995 include a tandem SAR.
(7) Of the total 59,250 options, 15,000 included a tandem SAR.
11
Retirement Benefits
All of the executive officers participate in the Tredegar Industries, Inc.
Retirement Income Plan (the "Pension Plan"). The Pension Plan provides a normal
retirement benefit equal to 1.1% of the participant's final average earnings up
to his Social Security covered compensation, multiplied by his years of pension
benefit service, plus 1.5% of final average earnings in excess of covered
compensation, multiplied by his years of pension benefit service. There is no
deduction for Social Security benefits. Estimated annual benefits under the
Pension Plan upon retirement at age 65, determined as of December 31, 1997, to
persons with specified earnings and years of pension benefit service are set
forth in the table below.
The Internal Revenue Code limits (a) the annual retirement benefit that
may be paid under the Pension Plan and (b) the earnings that may be used in
computing a benefit. The maximum benefit and earnings limitations are adjusted
each year to reflect changes in the cost of living. For 1997, the maximum
benefit limitation was $121,966 (based on a five-year certain and life annuity)
and the earnings limitation was $160,000.
Messrs. Gottwald and Scher also participate in the Tredegar Industries,
Inc. Retirement Benefit Restoration Plan (the "Restoration Plan"). The
Restoration Plan restores benefits that cannot be paid under the Pension Plan
due to the Internal Revenue Code maximum benefit limitation. The benefit
payable under the Restoration Plan is calculated by subtracting the amount that
would have been payable under the Pension Plan if not for the Internal Revenue
Code limitation and the amount actually payable under the Pension Plan. At this
time, only Mr. Gottwald is affected by that limitation.
12
PENSION PLAN TABLE
(Estimated Annual Benefits Payable at Retirement(1)(2))
Remuneration
(Final-Average Earnings)(3) Years of Service(4)
- ----------------------------- -------------------------------------------------------------------------
10 15 20 25 30 35 40
------ ------ ------ ------ ------ ------ ------
$125,000..................... 17,578 26,367 35,156 43,945 52,734 61,522 70,311
150,000 .................... 21,328 31,992 42,656 53,320 63,984 74,647 85,311
175,000 .................... 22,828 34,242 45,656 57,070 68,484 79,897 91,311
200,000 .................... 22,828 34,242 45,656 57,070 68,484 79,897 91,311
225,000 .................... 22,828 34,242 45,656 57,070 68,484 79,897 91,311
250,000 .................... 22,828 34,242 45,656 57,070 68,484 79,897 91,311
300,000 .................... 22,828 34,242 45,656 57,070 68,484 79,897 91,311
350,000 .................... 22,828 34,242 45,656 57,070 68,484 79,897 91,311
400,000 .................... 22,828 34,242 45,656 57,070 68,484 79,897 91,311
450,000 .................... 22,828 34,242 45,656 57,070 68,484 79,897 91,311
500,000 .................... 22,828 34,242 45,656 57,070 68,484 79,897 91,311
- ----------
(1) The estimated benefits assume retirement at age 65 and payment for the
lifetime of the participant, with five years of payments guaranteed (the normal
form of payment under the Pension Plan and the Restoration Plan). The table
assumes attainment of age 65 in 1997 and covered compensation of $29,304.
(2) The estimated benefit set forth in the table was determined using the
Internal Revenue Code limitation on earnings that may be used in computing a
benefit. The earnings limitation is subject to a transition rule that preserves
benefits accrued as of December 31, 1993 based on higher compensation levels.
Messrs. Gottwald and Scher have annual accrued benefits of $49,718 and $13,571,
respectively, under that transition rule.
(3) Final-Average Earnings is the average of the highest three consecutive
calendar year's earnings (base earnings plus 50% of bonuses) during the ten
consecutive years immediately preceding the date of determination. The current
compensation covered under the Pension Plan for each of the executive officers
named in the Summary Compensation Table and, in the case of Messrs. Gottwald
and Scher, the Restoration Plan, are: John D. Gottwald, $160,000; Norman A.
Scher, $160,000; Steven M. Johnson, $160,000; Douglas R. Monk, $160,000; and
Anthony J. Rinaldi, $160,000.
(4) The years of pension benefit service for each of the executive
officers named in the Summary Compensation Table are: John D. Gottwald, 19;
Norman A. Scher, 8; Steven M. Johnson, 8; Douglas R. Monk, 21; and Anthony J.
Rinaldi, 21.
13
Compensation of Directors
During 1997, each director who was not an employee of Tredegar or any of
its subsidiaries was paid $1,000 for each Board meeting attended in person. A
director who participated in the meeting by telephone was paid $250 per
meeting. In addition, each director was paid $750 for each Board committee
meeting attended in person. The chairperson of each Board committee received an
additional $250 for each meeting attended of his or her committee. Each
director was also paid a quarterly fee of $3,600 in 1997. Employee members of
the Board are not paid separately for serving on the Board.
Consulting Agreement with Richard W. Goodrum
Tredegar has a consulting agreement with Richard W. Goodrum, who retired
as Executive Vice President and Chief Operating Officer of Tredegar on March
31, 1996. Under the terms of that agreement, Mr. Goodrum continues to serve on
Tredegar's Executive and Management Committees and provides other services to
Tredegar. As compensation, Tredegar pays Mr. Goodrum $30,000 annually. The
agreement automatically renews for one-year periods on March 31st of each year,
unless Mr. Goodrum or Tredegar terminates the agreement at least 30 days before
the expiration of the then current term of the agreement.
Compensation Committee Report on Executive Compensation
Tredegar's Executive Compensation Committee (the "Committee") is comprised
of three independent directors. No Committee member is a current or former
employee of Tredegar or any of its subsidiaries. The Committee's role is to
review and approve practices and policies related to compensation primarily for
executive officers, including those officers listed in this proxy statement.
Compensation Philosophy
The Committee's philosophy is based on the principle that executive
compensation plans should be designed and administered to motivate and retain
highly qualified executives, with incentives linked closely to financial
performance and enhanced shareholder value. Control of all fixed costs is
critical to Tredegar's continued success. Controlling compensation costs
requires a significant portion of compensation increases to be closely linked
to performance and, therefore, variable in nature. However, Tredegar should
remain competitive with salaries.
Base Salaries
In determining base salaries, Tredegar identifies a reasonable range
around the average for comparable executive positions in a comparison group of
companies. Actual officer salaries are generally set within this range based on
individual performance and experience. Annual salary increases are considered.
The amount of such increases is based on a variety of factors including average
increases in comparison companies, individual performance (evaluated
subjectively), the officer's position in the pay range, Tredegar's financial
condition, and other variable components of compensation.
14
The comparison company group for compensation is generally not the same as
the published industry index that appears in the performance graph of this
proxy statement because index companies are not necessarily viewed as direct
competitors for executive talent. Comparison companies are chosen, and
information on pay evaluated, with the assistance of independent consultants.
The 1997 base salary for the Chief Executive Officer (CEO) was $350,000.
This salary is below the average for the comparison group and was not increased
during 1997.
Bonuses
Although bonus awards are generally discretionary, the bonus portion of
compensation is tied to an assessment of performance. Some division executives'
bonuses are linked directly by formula to specific division performance
measures. In such cases, economic profit added is the most widely used and most
heavily weighted measure. In other cases, a broad range of financial measures
as well as progress on strategic issues are reviewed.
In 1997, total bonuses paid to executive officers were approximately 3%
less than the 1996 amount.
The Committee awarded the CEO a bonus of $140,000, which was the same
amount awarded in 1996. In 1997, 28.6% of the CEO's total cash compensation was
comprised of incentive cash compensation, compared with 28.7% in 1996. Both
1997 and 1996 incentive cash percentages were below market averages.
Stock Options
Stock options are considered an important part of compensation at
Tredegar. As of February 1, 1998, 351 employees had stock options. Over time
the stock price reflects Management's performance. Through the options granted,
Management and shareholder interests are more closely tied.
Tredegar has three stock incentive plans (collectively the "SIP"). Each
year the Committee considers granting awards under the SIP to executive
officers and other employees and individuals providing valuable services to
Tredegar or its subsidiaries. Consistent with the objective of closely aligning
executives' interests with those of Tredegar shareholders, the SIP enables the
Committee to grant stock options, stock appreciation rights ("SARs"), and
shares of restricted stock. The Committee determines the terms and conditions
of any options, SARs, or restricted stock granted.
Executive officers as a group were granted options for 79,000 shares on a
discretionary basis in 1997, 40,000 at fair market value on the grant date
($49.625 per share) and 39,000 at above fair market value on the grant date
($63.00 per share). The CEO was granted 11,000 shares at fair market value and
11,000 shares at above fair market value.
Corporate Tax Considerations
A law, effective in 1994, disallows corporate tax deductions for executive
compensation in excess of $1 million for "proxy table" executives. This law,
covered in Internal Revenue Code Section 162(m),
15
allows certain exemptions to the deduction cap, including pay programs that
depend on formulas and, therefore, are "performance-based" rather than
discretionary.
While significant parts of Tredegar's compensation program is
discretionary, the Company is not currently in danger of losing deductions
under Code Section 162(m). The Committee will carefully review any compensation
plan or action that would result in the disallowance of compensation
deductions. The Committee will consider a variety of factors, including the
amount of any deductions that may be lost.
Executive Compensation Committee:
Phyllis Cothran, Chairperson Emmett J. Rice
Richard L. Morrill
February 24, 1998
Additional information on compensation paid to Tredegar's executive officers
has been included in Tredegar's Annual Report to Shareholders.
16
Comparative Company Performance
The following graph compares cumulative total returns for Tredegar, the
S&P Small Cap 600(R) Stock Index, and the S&P Manufacturing (Diversified
Industries), a nationally recognized industry index, since December 31, 1992.
The comparison assumes $100 was invested on December 31, 1992, with dividends
reinvested.
[GRAPH]
Fiscal Year Ended December 31
1992 1993 1994 1995 1996 1997
------ ------ ------ ------ ------ -----
TREDEGAR $100 98 116 217 408 674
S&P SMALL CAP 600 100 119 113 147 178 224
S&P MFG. 100 121 126 177 244 290
DESIGNATION OF AUDITORS
The Board has designated Coopers & Lybrand L.L.P., certified public
accountants, as Tredegar's independent auditors for the year 1998, subject to
shareholder approval. This firm has audited Tredegar's financial statements
since Tredegar became an independent company. A representative of Coopers &
Lybrand L.L.P. is expected to be present at the meeting. This representative
will be given an opportunity to make a statement and will be available to
answer questions.
Coopers & Lybrand L.L.P.'s principal function is to audit the consolidated
financial statements of Tredegar and its subsidiaries and, in connection with
the audit, to review certain related filings with
17
the Securities and Exchange Commission and to conduct limited reviews of the
unaudited financial statements included in each of Tredegar's quarterly
reports.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE DESIGNATION OF
COOPERS & LYBRAND L.L.P. AS AUDITORS.
APPROVAL OF TREDEGAR INDUSTRIES, INC. DIRECTORS' STOCK PLAN
The Board is asking the shareholders to approve the Tredegar Industries,
Inc. Directors' Stock Plan (the "Directors Plan") adopted by the Board on
February 25, 1998, subject to the approval of the shareholders. The Directors
Plan allows for the award of Common Stock and the grant of options to purchase
shares of Common Stock from Tredegar.
The Board believes that the Directors Plan will benefit Tredegar by
helping to recruit and retain directors with ability and initiative and will
better associate the interests of directors with those of Tredegar and its
shareholders. The more significant features of the Directors Plan are described
below.
Administration
The Executive Committee of the Board (the "EC") will administer the
Directors Plan, except that all awards under the Directors Plan must be
approved by the Board. The EC will have the authority to grant options and make
stock awards upon such terms (not inconsistent with the terms of the Directors
Plan) as the EC considers appropriate, subject to the approval of the Board. In
addition, the EC will have all other administrative authority regarding the
Directors Plan, which will include prescribing the form of agreements
evidencing the awards (subject to Board approval), adopting, amending and
rescinding administrative rules and regulations for the Directors Plan and
making all other administrative determinations regarding the Directors Plan.
Eligibility
Any director who is not an employee of Tredegar (or any subsidiary) is
eligible to participate in the Directors Plan if the EC, with the approval of
the Board, determines that the director has contributed significantly or can be
expected to contribute significantly to the profits or growth of the
Corporation. Tredegar is not able to estimate the number of individuals that
will be selected to participate in the Directors Plan or the type or size of
awards that will be granted.
Awards
Options. A stock option entitles the director to purchase shares of Common
Stock from Tredegar at the option price. The option price will be fixed by the
EC and approved by the Board at the time the option is granted, but the price
cannot be less than the fair market value of the Common Stock on the day the
option is granted. The option price may be paid in cash or, if the option
agreement allows, with shares of Common Stock or a combination of cash and
Common Stock. Options may be exercised at the times and subject to any
conditions as may be prescribed by the option agreement. The maximum period in
which an option may be exercised will be fixed at the time the option is
granted
18
but cannot exceed ten years. Options generally will be nontransferable except
by will or the laws of descent and distribution, except that, if permitted by
the option agreement, an option may be transferred without consideration to
members of the holder's immediate family, a family trust or a family
partnership or as permitted under Rule 16b-3 of the Securities Exchange Act of
1934, as in effect from time to time.
Stock Awards. The Directors Plan also permits the award of shares of
Common Stock. A stock award may be nontransferable or subject to forfeiture or
both until any conditions imposed by the stock award agreement are satisfied.
These conditions may include, for example, a requirement that the director
complete a specified period of service on the Board.
Share Authorization
Under the Directors Plan, a maximum of 15,000 shares of Common Stock may
be issued upon the exercise of options and the grant of stock awards over a
ten-year period. That limitation will be adjusted, as the Board determines is
appropriate, in the event of a change in the number of outstanding shares of
Common Stock by reason of a stock dividend, stock split, combination,
reclassification, recapitalization, or other similar event. The terms of
outstanding awards also will be adjusted by the Board to reflect such changes.
Amendment and Termination
No option or stock may be awarded under the Directors Plan after February
25, 2008. The Board may, without further action by the shareholders, terminate
or suspend the Directors Plan in whole or in part. The Board also may amend the
Directors Plan except that it may not increase the number of shares of Common
Stock that may be issued under or change the class of individuals who are
eligible to participate in the Directors Plan without first obtaining
shareholder approval.
Federal Tax Consequences
Tredegar has been advised by counsel regarding the federal income tax
consequences of the Directors Plan. No income will be recognized by a director
at the time an option is granted. Generally, the exercise of an option will be
a taxable event requiring the holder to recognize, as ordinary income, the
difference between the fair market value of the Common Stock and the option
price.
Income will be recognized as a result of the grant of a stock award when
the shares first become transferable or are no longer subject to a substantial
risk of forfeiture. At that time, the holder will recognize income equal to the
fair market value of the Common Stock.
Generally, Tredegar will be entitled to claim a federal income tax
deduction upon the exercise of a stock option or the vesting of a stock award.
The amount of the deduction is equal to the ordinary income recognized by the
holder.
For approval, the Directors Plan must be approved by a majority of the
votes cast on the proposal, provided that the total number of votes cast
represent a majority of the shares entitled to vote. Any
19
votes withheld will be counted as votes cast and any shares held in street name
that are not voted will not be counted in determining the number of votes cast
on the proposal.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE DIRECTORS' STOCK
PLAN.
PROPOSALS FOR 1998 ANNUAL MEETING
Under the regulations of the Securities and Exchange Commission, any
shareholder wishing to make a proposal to be acted upon at the 1999 annual
meeting of shareholders must present the proposal to Tredegar at its principal
office in Richmond, Virginia, no later than November 26, 1998, in order for the
proposal to be considered for inclusion in Tredegar's proxy statement.
In addition to any other applicable requirements, for business to be
properly brought before the annual meeting by a shareholder, even if the
proposal is not to be included in Tredegar's proxy statement, Tredegar's
By-laws provide that the shareholder must give written notice to the Secretary
of Tredegar no later than ninety days before the meeting. As to each matter,
the notice must contain (i) a brief description of the business desired to be
brought before the annual meeting (including the specific proposal to be
presented) and the reasons for addressing it at the annual meeting, (ii) the
name, record address, and class and number of shares beneficially owned by the
shareholder proposing such business, and (iii) any material interest of the
shareholder in such business.
ANNUAL REPORT ON FORM 10-K
Tredegar will provide without charge to each person to whom this Proxy
Statement has been delivered, on the written request of any such person, a copy
of Tredegar's Annual Report on Form 10-K for the fiscal year ended December 31,
1997, including the financial statements and financial statement schedules.
Requests should be directed to Tredegar Industries, Inc., 1100 Boulders
Parkway, Richmond, Virginia, 23225, Attention: Corporate Secretary. Provided
with the copy of the Form 10-K will be a list of exhibits to the Form 10-K,
showing the cost of each. Any of such exhibits will be provided upon payment of
the charge noted on the list.
OTHER MATTERS
The Board is not aware of any matters to be presented for action at the
meeting other than as described in this Proxy Statement. However, if any other
matters are properly raised at the meeting, or any adjournment thereof, the
person or persons voting the proxies will vote them in accordance with their
best judgment.
By Order of the Board of Directors
Nancy M. Taylor, Secretary
20
NOTICE
and
PROXY STATEMENT
for
ANNUAL MEETING
of
SHAREHOLDERS
May 20, 1998
[LOGO]
Tredegar Industries, Inc.
1100 Boulders Parkway
Richmond, Virginia 23225
TREDEGAR INDUSTRIES, INC.
Richmond, Virginia
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1998
The undersigned hereby appoints Michael W. Giancaspro, Norman A. Scher and
Nancy M. Taylor, or any of them, with full power of substitution in each,
proxies (and if the undersigned is a proxy, substitute proxies) to vote all
shares of stock of Tredegar Industries, Inc. that the undersigned is entitled
to vote at the annual meeting of shareholders to be held on May 20, 1998, and
at any and all adjournments thereof:
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as otherwise to vote for all the
indicated below) nominees listed below
John D. Gottwald, Andre B. Lacy, Emmett J. Rice, Thomas G. Slater, Jr.
INSTRUCTION: To withhold authority to vote for any of such nominees write the
nominee's name on the line provided below
- --------------------------------------------------------------------------------
2. [ ] FOR [ ] AGAINST [ ] ABSTAIN The proposal to approve the designation of
Coopers & Lybrand L.L.P. as the auditors
for Tredegar for 1998
3. [ ] FOR [ ] AGAINST [ ] ABSTAIN The approval of the Directors' Stock Plan
In their discretion, the Proxies are authorized to vote upon such other
business and matters incident to the conduct of the meeting as may properly
come before the meeting.
Please sign and date on the reverse side
This Proxy is solicited on behalf of the Board of Directors. This Proxy, when
properly executed, will be voted in the manner directed herein by the
undersigned shareholder. If no direction is made, this Proxy will be voted for
Proposals 1, 2 and 3.
Dated______________________________ , 1998
-------------------------------------------
Signature
Please sign name exactly as it
appears on the stock certificate.
Only one of several joint owners
need sign. Fiduciaries should give
full title. Please mark, sign, date
and return the Proxy Card Promptly
Using the Enclosed Envelope.
